Keeping Up With the Government’s New Pension
The government’s current “White Paper,” outlining the new single tier plan, is expected to affect different age groups in a number of ways. People who are already receiving a pension will see no changes at all. If you qualified for the “Sepr,” then your payments will continue as before. People already receiving a pension may have been better compensated had they chosen to wait until 2017 before filing, but they have nothing to be concerned about today.
When the New Program Begins
In 2017 the new program will be applied for anyone not currently receiving a pension. One of the changes that will come into effect at that time will be the elimination of the second pension, as the universal flat rate is scheduled to begin in April 2017. Effectively this new universal pension will provide much needed clarity for those who are trying to plan in advance for their retirement. Those who currently have private pensions should take this opportunity to have a pension review with their advisor.
Citizens will know exactly what their government pension will be at retirement, thereby allowing them to plan for their retirement years. As they plan throughout their lifetime for retirement, they’ll be better equipped to judge if they need to put money aside for their retirement years, so they’ll be able to live the lifestyle they want.
Help for the Self-Employed Population
People who are currently self-employed will now benefit under the government’s new plan. Currently, few have funds set aside for their retirement years. With the introduction of the new state plan they will now be able to become part of the new pension system for the first time. The self-employed welcomed this change as it will help them in preparing for retirement and those who do have private pension plans setup can take this opportunity to do a pension review, in order to take into account the new system being introduced.
Caregivers and Mothers
Caregivers and mothers who have not been part of the workforce for any extended period will also benefit. In fact, the new pension plan is expected to affect over 750K people who are considered earners with a low income. Those who do not have 10 years of contributions to the NI will not receive any pension and it’s crucial that they plan for their retirement. Part of that planning will be looking at other options in the marketplace that will help them save for retirement.
Those who currently have accrued pension benefits within the system are assured by the government that they will not be denied any benefits they currently have in the system. Those who will be entering the workforce or who have been recently employed will lose some benefits. This can be offset by knowing what their pension will be upon retirement, thereby allowing them a maximum amount of time to plan for their future. The small reduction in their pension should have no real effect on their retirement years from now. It also gives them time to look at private pension schemes to ensure their future is comfortable.
Retirement in the Future
People who are years away from retirement will have a distinctive advantage. They’ll have years to invest their savings and make plans for the retirement they’d like to have. Financial advisors will be part of their plan in setting long term goals for retirement, doing a pension review regularly, and it’s expected that the generation entering the workforce today will understand the value of planning for the future. It also means that they’ll not lose any pension benefits, as the means testing will be removed.
With the government’s new plan of yearly retirement funds of £7,500, this new generation will see the benefits of a company’s pension plan, look at other investment vehicles and it’s hoped that in the future the country will never again face any type of pension crisis. The bottom line is the entire country will have time to absorb the changes, plan with a financial advisor for the changes and look toward a more secure future.
